You are planning to estimate a short - run production function for your firm, an

Question

You are planning to estimate a short - run production function for your firm, and you have collected the f ollowing data on labor usage ( L ) and output ( Q ):

a. Please key in the data into MS Excel for regression analysis . E stimate your firm’s short - run production function. Do the parameter estimates have the appropriate algebraic signs? Are they statistically significant at the 5 percent level?

b . At what point do you estimate marginal product (MP) begins to fall?

c . Calculate estimates of average products (AP) and marginal products (MP) when the firm employs 2 0 workers.

d . When the firm employs 2 0 workers, is short - run marginal cost (MC) rising or falling? How can you tell?

Labor Usage Output 3 1 7 2 9 3 11 5 17 8 17 10 20 15 24 18 26 22 28 21 30 23

Explanation / Answer

b. from labor 28 the marginal productivity started to be fall

c. at 20 workers the output is 15 untis, the average output is= 15/20= 0.75 units per labor

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